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the Equal Credit Opportunity Act
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protects borrowers applying for Home
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Loans from discriminary lending
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practices this federal law is a crucial
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part of your real estate exam it places
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significant role in promoting fair
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housing and of course fighting
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discrimination hello everybody it's Zach
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here from Real Estate licensepizure.com
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today we're talking about the Equal
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Credit Opportunity Act let's get started
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so the Equal Credit Opportunity Act or
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the ecoa prohibits discrimination
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against borrowers applying for home
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loans per The ecoa Lending institutions
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cannot treat protected classes
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differently than anyone else what are
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these protected classes or what other
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protected classes under the ecoa will we
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have race color religion national origin
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sex age receipt of income and the
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applicant's exercise of any right under
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the credit consumer protection act what
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is the consumer credit protection act
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well the consumer credit protection act
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protects consumers from abusive lending
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practices this act encompasses the Equal
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Credit Opportunity Act or Title VII what
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housing loans does this cover well under
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the consumer credit protection act the
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ecoa covers mortgage loans Home
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Improvement loans and home equity loans
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let's talk about why the Equal Credit
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Opportunity Act was placed in the first
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place women were regularly facing
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discrimination for mortgage lenders
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before the ecoa these lenders often
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refuse to consider a married woman's
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income when giving out loans they also
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denied credit loans to single women more
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often than other applicants the Equal
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Credit Opportunity Act was created to
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prohibit this type of discrimination
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based on sex and marital status however
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it wasn't very long after that the
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Congress amended the ACT to include the
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other protected classes that we talked
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about before so what are examples of
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Equal Credit Opportunity Act violations
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I'll put them on the screen inquiring
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about a borrower's marital status
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denying loans to borrowers because of
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their religion charging higher interest
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rates to minorities denying credit
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opportunities to qualified women
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offering predatory loans to elderly
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persons or redlining which we've talked
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about and a few other ones so how does
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the Equal Credit Opportunity Act work in
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real estate well this act ensures that
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Banks mortgage companies and Credit
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Unions do not take advantage of
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potential home buyers let's see an
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example of how the Equal Credit
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Opportunity Act operates in real life
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applications so there was a court case
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called the Texas Department of Housing
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and Community Affairs versus inclusive
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communities project Incorporated in this
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court case inclusive communities project
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or iacp for short sued the Texas
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Department of Housing and Community
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Affairs the ICP alleged that the
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department was using discriminary
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practices when approving tax credits
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they claimed that the department was
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proving Credits based on race which
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segregated neighborhoods and violated
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the fair housing act the Supreme Court
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sided with the ICP because the
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Department's actions caused disportion
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harm to minority community the court
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extended this reasoning to apply for the
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entire mortgage industry which is where
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the ecoa comes into play for example
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mortgage companies that give out loans
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to let's say more white people than
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black people that would be considered
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violating Fair lending laws so who
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enforces the Equal Credit Opportunity
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Act will the Consumer Financial
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Protection Bureau or the cfpd along with
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other federal agencies enforce the Equal
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Credit Opportunity Act if borrowers feel
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accreditor has discriminated against
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them they can file a complaint with the
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Department of Housing and Urban
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Development or HUD borrowers also have
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the option to file their own lawsuits
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and there's also a few other federal
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agencies designed to support Fair
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lending and I'll put them on the screen
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real fast for you obviously the FTC the
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FDIC and more so what are the penalties
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for violating the ecoa well there's
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going to be three levels of Damages
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potentially so one actual damages two
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punitive Dam images which could be up to
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ten thousand dollars for individual
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lawsuits and then five hundred thousand
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dollars or one percent of their net
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worth for class action lawsuits so
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really there's three levels
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um you know two verifying the potential
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violation or the potential penalty for
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the violation so what does the ecoa not
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cover well it does not cover the
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following loan types subordinate loans
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second liens loans secured by land
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instead of dwellings so what factors can
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lenders consider when it comes to
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figuring out if they should approve or
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not improve these loan types well the
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ecoa does not cover loan applicants who
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get denied credit for the following
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reasons maybe poor credit history
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insufficient income lack of collateral
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maybe the loan amount is too high or
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maybe the applicant's property is just
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in poor condition that is perfectly okay
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these mortgage providers can look at
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that and if one of those boxes are
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checked then they are allowed to deny a
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loan so what do you need to know for the
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real estate exam well the Equal Credit
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Opportunity Act protects home buyers
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against discrimination from lending
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companies this act asserts that mortgage
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companies must treat protected classes
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equally when giving out loans because
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the ecoa is so vital for promoting fair
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housing it's an important part of the
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real estate exam and you must be
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familiar with it for more videos on Fair
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Housing and real estate click here and
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click here to subscribe thank you guys
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so much for watching until next time see
